U.S. Treasury Secretary Timothy Geithner appeared on CBS News’ Face the Nation and NBC’s Meet the Press on Sunday to stress the importance of raising the debt ceiling before the August 2 deadline.
Geithner warned audiences about the long-lasting effects of a default, which would sharply spike interest rates, reduce the values of homes, cut jobs, impact retirement savings, hurt the economic security of the American people, and result in a loss of confidence in the government.
When NBC’s David Gregory asked Geithner to provide specifics on the ramifications of a default, he clarified that the U.S. would no longer have the ability to borrow to meet obligations.
“We have to borrow now 40 cents for every dollar we spend. Now, on August 2, if Congress hasn’t acted, we’re left with the cash we have and the cash we’re going to take in,” he said.
“And every week starting the week of August 2, we have to go out and finance roughly $100 billion in maturing obligations of the government. We make 80 million checks a month to Americans, 55 million people on Social Security benefits, millions more Americans on veterans benefits, Medicare, Medicaid, people who supply our troops in combat.”
Geithner continued by saying that the federal government would have to prioritize paying the debts it has already incurred.
“So on August 2, we’re left with the cash on hand and the cash we take in,” he told Gregory. “And we have to convince people to come and refinance $500 billion in maturing principal payments that come due in August.”